Changing consumer demographics, shrinking product lifecycle and easy financing are bringing about a change in the automotive markets worldwide. One problem that exists is information asymmetry (for example, a lemons market). In such a scenario, a seller is more informed than the buyer, and a buyers' decision can be driven by average price. Used vehicles of average quality dominate, and a further reduction in average price as well as an unstable market results. Additionally, used vehicle prices can be highly influenced by consumer-to-consumer (C2C) transactions.
By way of example, used car owners (end-users) want to sell their cars, and there are buyers (end-users) who can buy the used cars. However, even though the car owners are typically fully aware of the condition of the cars they are trying to sell, the buyers are not. In some instances, even the sellers are not completely aware of the condition of the car to allow them to determine the best price they can get for their used cars. More importantly, the buyers only have a partial view because they typically do not properly know the condition of the car.
In such a scenario, it can be very difficult to sell the cars through an auction mechanism. Because the buyers only have a partial view, the bids will be on the lower side and therefore even if a car is in good condition, it will not be able to derive as good a price as possible.
In another example, a third party operator (for example, one with sufficient expertise in judging the condition of a car) can buy the used cars from the sellers. The third party can then do some refurbishment of the car (if required) and sell these used cars to the potential buyers. In such a situation, where the third party is an authority in judging the condition of the cars, the sellers can be more confident that they can get the actual value of the used cars. Also, the buyers can trust the third party and buy the used cars at the offered price.
In exemplary marketplaces, as described above and herein, there can be two kinds of buyers and sellers: third-party (TP) buyers and sellers, and end-use (EU) buyers and sellers.
Problems can arise, however, in that once the third party buys a used car from an EU-seller, the third party needs to refurbish the car and then hold it in its own inventory until a point of time in the future when the third party is able to sell the used car to an EU-buyer. For example, if a car is held in the inventory for a long time, the value of the car likely decreases, and there is also a cost associated with holding an inventory. Additionally, a third party would not want to offer a price to the EU-seller that is higher than the price offered to an EU-buyer. Therefore, a third party will likely not buy a used car from an EU-seller that is higher than the selling price. In general, the higher the price that a third party offers to the EU-sellers, the higher the likelihood is that the EU-seller will sell the car to the third party. Similarly, the lesser the price that the third party offers to the EU-buyers, the higher the likelihood is that an EU-buyer will buy the used car from the third party (with less waiting time in the inventory).
As such, there exists a need for automated centralized pricing techniques for third party market operators of used vehicles that can enable, for example, creation of a stable market, information symmetry, stable pricing and efficient inventory management.